CPQ - Configure, Price, Quote

Configure Price Quote - Solutions, Software and Proposals

Showing posts sorted by relevance for query price. Sort by date Show all posts
Showing posts sorted by relevance for query price. Sort by date Show all posts

Five common pricing mistakes a CPQ solution will address

Pricing is difficult and also very sensitive. Changes in pricing is one of the most effective way to level overall profit.

This list of pricing mistakes can be used to build a good business case for a CPQ (Configure-Price-Quote) investment.

Weak controls on discounting


It’s not uncommon that sales representatives are given a lot of freedom when it comes to negotiating the price. This means what the profit per deal is very dependent on the person executing the sales.

Discounts are often given without a controlled won/loss analysis and are more based on gut feeling. This means that prices will vary very randomly.

Without analysis and a proper approval process these issues will not go away. This is something a CPQ solution will address.

Inadequate systems for tracking competitor selling prices and market share


It’s difficult to understand the completion and most companies don’t put any effort into analyzing the lost deals.

With a CPQ solution it’s possible to benchmark the won and lost deals in a very structured way. It’s possible to find what key features of the product that correlates with won deals and also what features that are typical for lost deals.

Cost-plus pricing


Cost plus pricing is still very common in the manufacturing industry. The problem with this approach is that it assumes that the customer value is dependent on the production cost. Everybody knows that this is not the case.

A CPQ solution can price on factors that are actually valued by the customer and at the same time ensure that margin.

Price increases poorly executed


There is a problem when price increases can’t be motivated. If we’re not providing any new customer value, why should I pay a higher price?

It’s essential to plan ahead and do price increases as your product improves. If your new engine will cut fuel consumption there is no problem to pay a higher price.

That’s why price increase should be coordinated with product development. This means that timing is essential. Do the math and plan ahead. This is a process that a CPQ solution should support.

Worldwide price inconsistencies


In a global market it’s no longer possible to have inconsistent pricing.

By introducing a central storage for local price it’s possible to understand and correct price inconsistencies. A CPQ solution normally connects the global and the local prices. This means that a CPQ solution introduces the possibility to have governance for local pricing.

Configure Price Quote software - the key benefits

Configure Price Quote software shortens the sales processes by automating the configuration, pricing and quoting of complex products, services and bundles.

“configure price quote” software is getting attention from global companies looking to reduce errors and streamline sales of complex product. Configure price quote software will serve as a consistent front-office interface with all necessary integration to existing back-office systems.

CPQ (“configure price quote”) is more and more becoming a critical advantage in several industry verticals. Fast and accurate quotation processes is no longer something to strive for – it’s now a critical factor in the competitive landscape.

The primary benefits with Configure Price Quote software include:

  • Guided and automation sales process supporting your customers through important selection including configuration, quoting and ordering.
  • Central pricing processes for establishing, maintaining and publishing pricing for products, services and combination bundles.
  • Workflow for quoting including creation, management and negotiation of sales quotes.

Guided and automated sales process

  • Increased deal size by simplifying cross-sell, up-sell and solution bundles. Service contracts and other related services are quoted together with the product ensuring returning revenue for a longer period of time.
  • Reduced costs and increased customer satisfaction as incorrect orders are dramatically reduced.
  • Increased sales productivity when repetitive, time consuming manual work is eliminated.

Central pricing process

  • Pricing consistency and automatic pricing changes instantly available in all sales channels.
  • Defined structure for pricing to decrease the maintenance due to changing market conditions.
  • Pricing models based on customer segments with analytics feedback for continuous improvements. Built in dashboards for sales and pricing governance.

Workflow for quoting

  • Significant time savings to create, negotiate and convert quotes into orders.
  • Increased visibility and traceability in the quoting process.
  • Support for channel and partners sales for complex products.

What is CPQ?

Definition


CPQ is an acronym for Configure, Price, Quote. CPQ is used to describe the process of select components (configure), handle pricing (price) and generate documentation (quote). CPQ software is primarily used for complex products, services or a combination of the two.

CPQ solutions
  • supports a simple way to select valid product combinations with respect to product rules and limitations
  • price the product correctly according to bundling and discounts
  • creates an accurate and persuasive quote based on this information

CPQ software connects front and back end systems and automates the lead-to-cash process.

What is a CPQ process?


What’s included in a CPQ process? Is it all automated and in what way is it adoptable and flexible?

Configure: All complex products have limitations to how modules or sub-components can be combined. The user normally specifies key features and main products, a configurator handles all limitations and itty-bitty details.

Price: Manufacturing costs, geographies, competitive situation, and local protocols - the pricing can be just as complex as the product itself. The price adjustments should both be automatic but also offer flexibility and advice for sales tactics.

Quote: Documents describing a complex product includes texts, illustrations, data sheets, drawings. All specific for each offer generated. The level of details should be flexible and document generation should be fully automated.

Top 4 reasons why manufacturers choose a CPQ solution

What criteria can you use to determine if your company needs a CPQ solution? How can you tell when it’s time to invest in CPQ software?

I wouldn’t set out specific criteria as much as offer four reasons that I think will help you sort out an answer.

This is what we hear over and over again from clients and potential customers.

Spend more time selling


Is there a feeling that not enough selling is being done by your team? If so, this deserves your immediate attention.

Sales people are expensive and their primary role is to engage with customers and prospects. This is how your organization generates revenue.

Preparing quotations and proposal documentation is still a major tasks in many sales organizations. If this can be reduced there will be more time for actual selling. This is the first reason to invest in a CPQ solution.

Better proposals


A good quote delivers a vibrant, crisp and compelling proposals that distinguish you from the competition. A superior quote will persuade your customer and win more business.

Developing best practice for quotes, RFP documents and other sales documentation enables your team to increase the overall quality of the delivered proposals.

A better proposal will tell the customer that you will fulfill their needs and deliver what the customer wants. A better proposal that will provide important benefits and clearly describe the delivered value. A better proposal that validate that you have the right qualifications to fulfill the customer needs.

The proposal should send the message why your company better than anyone else can deliver the optimal solution with the highest value. This is the second reason to invest in a CPQ solution.

Get the price right


Working with complex products is somewhat problematic. To get the price right is a challenge and it makes a big difference when it comes to bottom line earnings.

The first problem: One option often requires another option. Forgetting that other option in a quote can be will severely reduce the profit. But to keep track of all options and exception is a difficult task that requires up-to-date knowledge.

The second problem: When multiple products are combined there is normally a reduction in price that only applies under certain conditions. To work with packages is an efficient way to expand the offering, but it also requires that up-to-date knowledge.

The third problem: In a changing world pricelists need to adopt fast. What was previously done on a yearly basis is nowadays more likely to be day-to-day updates. To be able to adopt to changing circumstances also requires that up-to-date knowledge.

The third reason to invest in a CPQ solution is the fact that up-to-date knowledge should be part of the CPQ package.

First to respond


When a customer asks for a quotation or proposal it’s unlikely the request is sent only to your company. The most likely scenario is that the same questions and requirements will be sent to up to a dozen competitors.

Companies with an implemented CPQ solutions reports that speed makes a difference when it comes to closing more deals. A rapid respond really makes a difference.

Being the first to respond will in itself not guarantee better business. But in combination with more time selling, better proposals and correct pricing it definitely makes a difference. That’s why it’s the forth reason to invest in a CPQ solution.

CPQ - Configure, price, quote software

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Why CPQ - business drivers at a glance

Configure price quote (CPQ) software cuts through sales difficulty to help leading corporations sell more effectively. CPQ empowers sales reps and associates to recommend combination of goods and services, generate accurate quotes, and gets deals signed faster.

With effective step-by-step guided selling and streamlined workflows for quotes, proposals and contract management CPQ software takes advanced sales to the next level. CPQ increases average deal size, accelerates sales cycles and makes your business more professional.